Major telecommunications analysts are saying that the rollout of 4G services by mobile network operators in Nigeria and other African countries may not be financially profitable.
Some critical look based on a new market research conducted by Xalam Analytics showed that the 4G network deployment and adoption had not directly improved the cash flow of network operators.
The report of the research entitled ‘The failure(s) of African 4G’ described 4G network in Africa as “a commercial success in user terms, but an economic failure” saying that the financial impact could be destructive considering the capital costs of purchasing 4G licences and rolling out of the network.
“The monetisation of African 4G is highly problematic. We found no solid correlation between strong 4G adoption and increased mobile operator profitability. Far from helping turnaround African mobile operators’ cash flow problems, 4G is making them worse over the medium term,” it added.
Analysts at Xalam Analytics, however, stressed that 4G deployment was necessary for MNOs as its adoption formed the baseline foundation for cloud services, data centre, video streaming, and e-commerce.
The report said that while other countries globally were making significant progress with 4G and pushing to introduce 5G, African 3G had remained robust as African mobile operators have added 20 per cent more 3G base stations than 4G over the past 18 months.
“4G, in essence, impacts everything. It is a barometer for how fast, and how ready the African market will be in entering the much-ballyhooed fourth industrial revolution. 4G adoption is the baseline foundation for cloud services, data centre, video streaming, and even e-commerce projections. African fintech is arguably the only sub-segment impervious to how fast 4G grows, as it is not as bandwidth-dependent,” it added.
Xalam highlighted the impacts of slow adoption of 4G on the continent as, “SMEs sidestepping cloud services because of unavailable, or too expensive high-speed data services. Data centre markets operating at 10 per cent of their potential. Video streaming services not picking up as fast as expected, for largely similar reasons. Tighter e-commerce models due to a smaller than expected addressable base.”
In Nigeria, Airtel began the deployment of 4G networks in February and reported coverage in over 60 cities.
Globacom also claimed to have extended its 4G LTE network coverage to all the 36 states, the Federal Capital Territory, including 208 tertiary institutions.
9mobile reportedly has coverage in Lagos, Abuja, Port Harcourt, Kaduna and Kano while MTN is reportedly in all the 36 states and FCT.
Speaking at the launch of the network in Lagos, Nigeria’s commercial centre, the Chief Executive Officer and Managing Director, Airtel Nigeria, Mr Segun Ogunsanya, said, “Indeed, 4G comes with tons of benefits and the possibilities are endless: it will accelerate economic and commercial activities; it will boost personal and professional productivity; it will help in creating more entrepreneurs; it will offer the youth a big leverage to express their creativity and talent; it will improve the overall quality of life and connect more people to their dreams.”